Obama: Entitlement tweaks for taxes

President Barack Obama told Senate Democrats on Tuesday that his budget to be released in April would align closely with their priorities.

He also warned that Democrats need to embrace at least some changes to unsustainable entitlement programs in order to achieve their long-term priorities.

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The president made the case, senators attending the luncheon said, to protect entitlements for future generations — a key Democratic priority in negotiations with Republicans over a deficit reduction deal known as a grand bargain.

But Obama acknowledged that Social Security and Medicare — big drivers of federal spending — wouldn’t survive without some changes to save money. Obama added that Republicans must first agree to more revenue hikes before the White House would concede on changes to entitlement programs, senators attending the luncheon said.

Obama seemed to be opening the door a crack toward a way forward: if the White House is seen as willing to put entitlements on the table, some Republicans may reconsider their staunch opposition to new revenue.

Obama told Senate Democrats that he sees his framework — a mix of new revenues and spending cuts — as a big enough compromise. He said Republicans will need to move toward him to obtain a grand bargain, which he sees as the way out of the sequester, Sen. Tom Harkin (D-Iowa) said. Obama also reiterated that he isn’t going to negotiate over the next debt ceiling increase, slated to come up this summer.

“I think the president made it clear he understands the framework of a major [budget] agreement,” Sen. Ron Wyden (D-Ore.) said. “It’s got to be this idea of common ground… That’s [the] basis of his outreach to senators and [House members]. He’s going to be doing a lot of eating on the Hill this week.”

Whether both sides can reach a deal that includes entitlement changes and new tax dollars may become clearer on Wednesday, as the president meets with House Republicans. Obama completes his Hill tour on Thursday with meetings with House Democrats and Senate Republicans.

Obama’s blunt talk on entitlements doesn’t mean that Senate Democrats are on board. Several members in the meeting spoke up about the concerns that changes to the programs would be part of a deal, attendees said.

“He said he hoped we can reach some sort of grand bargain,” Harkin said. “Of course some of us responded by say, ‘Yes, but what is in that grand bargain?’ We don’t want to start whacking away at Social Security or Medicare.”

According to Harkin, Sen. Carl Levin (D-Mich.) asked the president about his plans to switch to a “chained-CPI,” which would lower the rate at which Social Security benefits are increased and cut the cost of the program in the long run.

“We’re not going to go so far as to negotiate away our principals and what we think is best,” Harkin said. “When you’re talking about entitlements, Social Security, Medicaid, Medicare, there is more than one way to solve that problem.”

Senate Majority Leader Harry Reid (D-Nev.) said that House Republicans have never gone beyond broad discussions about entitlement programs and that their talk has been used to argue Obama would agree to changes.

“Here’s the issue — the president in the past in personal negotiations with Boehner, Biden, in personal negotiations with Cantor has indicated that they would be willing to do certain things,” Reid told reporters after the meeting. “The Republicans never get further than that.”